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China property
BusinessChina Business

Shanghai’s commercial property landlords face pressure to lower rents, help tenants’ businesses amid weak consumer sentiment

  • Nearly all tenants are asking for reductions when negotiating lease renewals: source
  • 10 new shopping centres launching in Shanghai’s non-CBD areas this year will add pressure to an already weak market, JLL says

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Nanjing Street, Shanghai’s main tourist and shopping street. Shanghai’s economic output expanded by 5 per cent last year, falling short of the 5.5 per cent goal the local ­government set at the beginning of 2023. Photo: EPA-EFE
Daniel Renin Shanghai

Owners of commercial properties in Shanghai are under pressure to cut rents to support restaurants and retailers facing the daunting task of sustaining their businesses amid lacklustre consumer demand.

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Shopping centres and retail outlets based in the city’s non-central business district (CBD) areas are likely to see a rise in vacancy rates due to the closure of unprofitable businesses, according to developers and property brokers.

A senior executive with a major state-owned commercial property developer in Shanghai told the Post that nearly all tenants were asking for reductions in rents when they negotiated with landlords on the renewal of their lease agreements. Some of the business owners had even threatened to shut shop if rents could not be negotiated down, he added, speaking on condition of anonymity.

The pressure to cut commercial rents comes after Shanghai, China’s business and financial hub, failed to achieve its growth target in 2023, when its gross domestic product stayed flat after the country’s reopening following the Covid-19 pandemic.

“I have requested the landlord to slash the rent by 20 per cent to help me survive the economic slowdown,” said Zhang Yixiang, owner of a restaurant based in Tangqiao, in Shanghai’s Pudong New Area. “I would have to close down my noodle shop if the rental costs were to stay unchanged.”

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He added that based on the current rent of 30,000 yuan (US$4,178) a month, the noodle shop would not be able to break even amid dwindling sales.

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